May 14, 2013 / 11:01 AM / 4 years ago

RPT-Fitch: 'Fee for value' biggest test for U.S. nonprofit hospitals

May 14 (Reuters) - (The following statement was released by the rating agency)

Transitioning to a predominately ‘fee for value’ based reimbursement system from fee for service is one of the most significant challenges facing U.S. nonprofit hospitals today, according to a new Fitch Ratings report.

‘Organizations are cautiously entering into new payment arrangements so the shift will be gradual, with expected dollars at risk initially comprising a small percentage of overall revenue,’ said Senior Director Emily Wong. ‘As providers enter into more risk based contracts, financial uncertainty is likely to increase.’

Fitch will assess the total risk exposure on the organization’s financial profile and management’s ability to manage the risk.

In anticipation of this pressure, hospitals are investing in infrastructure including physician alignment strategies and information technology to enable improved quality of care while simultaneously lowering costs.

Population health management is an emerging trend. Many providers are focused on partnering with other providers to coordinate care and lower costs. Various initiatives include accountable care organizations, bundled payments, risk based contracting, and provider sponsored health plans.

Additional information is available in Fitch’s special report, ‘The Journey to Value Based Reimbursement’, available at ‘’ or by clicking on the above link.

Link to Fitch Ratings’ Report: The Journey to Value Based Reimbursement

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